Dive Brief:
- WH Group says it has shelved plans for a $1.9 billion initial public offering of shares. The announcement comes just days after the Chinese company reduced the level of funding it sought as market interest appeared to wane.
- The decision leaves WH Foods with no clear path to repay the billions it borrowed to buy Smithfield Foods last year.
- Initial talk surrounding the IPO suggested WH Group expected an offering of $5.3 billion.
Dive Insight:
Watching the unraveling of the WH Group's plans for an IPO has been like an exercise in disaster planning. Whatever could go wrong in this deal, has gone wrong.
First, there's the systemic challenges of taking a company public in Hong Kong, where large numbers of banks participate in the process. In this particular case, no single bank seemed willing to commit resources to the deal.
Second, there's the ugly fact that pork production in the U.S. is rapidly shrinking with the arrival of the porcine epidemic diarrhea virus here. That's the same virus that cut pork production in China, which helped give rise to the Smithfield deal in the first place.